Benedicto Haryono, CEO and Co-Founder of SME lending Fintech Koinworks.
Alvin Cahyadi and Maliekah Harjani, Convergence Ventures
KoinWorks is a Peer-to-Peer (P2P) lending platform with the largest number of lenders in Indonesia and has been registered and supervised by OJK (Financial Services Authority). KoinWorks brings together borrowers and lenders online to provide access to financial services for people who have not been served by banking institutions through various services on a single platform. KoinWorks is a trusted financial technology solution in Indonesia that focuses on productive loans for business development through KoinBisnis and education products through KoinPintar products.
Benedict Haryono is excited in response to the recent $12M Series B funding for Koinworks. With this, Koinworks is now under a greater pressure to further empower Indonesians with access to productive loans. The vision of Koinworks has always been the same – to create an investment community that believes in the power of finance to bring good to society. Haryono believes that finance is a tool that unlocks potential – to produce and sell, achieve productivity and reach success. What small enterprises would normally achieve in 3 years, could take as little as 6 months with access to strategic financing.
Koinworks as Responsible Lenders
To be a responsible lender, it’s essential to know the purpose of the loan – whether it is productive, or it is for leisure. Through this, one must understand what kind of purpose they would define as responsible lending. A responsible lender must also price their product fairly, without overcharging customers. This can be done through risk-based pricing. A responsible lender should treat its customers well in terms of pricing, data collected, and loan collection methods.
Fraudulent Loan Requests
Are there fraud attempts from users? Absolutely. This happens once a consumer-facing platform starts to scale. To mitigate this, Koinworks adopts a strict KYC procedure on both the borrower and lender side. On the borrower side, Koinworks runs identity checks from their ID, civil registry, criminal record, credit history and data from platform partners. If Koinworks finds some suspicious variables or indication of fraud, Koinworks will send a surveyor to the user’s home or workplace for a last check.
Government’s Involvement in Fintech
Haryono believes that the Indonesian government is proactive in Fintech lending and is supportive in building the market. Not long after FinTech players emerged in 2016, OJK drafted their first regulation to help shape FinTech lending into a healthy sector. Haryono’s feedback is that they are supportive in building the market. However, the current compliance procedure at the moment could be streamlined even more.
Addressing the Gap
According to OJK, Indonesia’s lending gap is IDR 1,000 trillion. Haryono states that Indonesia’s FinTech lending market is far from achieving this number, having disbursed only IDR 20-30 trillion in lending capital so far. It is essential to note the figure reported by OJK also includes consumer loans, and not just productive loans. Haryono estimates that 20-30% of total disbursed amount comprises of productive loans. At the moment, FinTech lending is compiled into one type of business. Hopefully in the future, the government could create different regulation for different products such as pay-day loans, consumer loans and productive loans.
Finding your investors
According to Haryono, choosing your investors is like choosing your life partner. A pitch includes what you set out to accomplish and how you intend on getting there. Koinworks’ goal is to find investors that are aligned with your goals and willing to support you on your journey. As the company grows, Haryono believes that your board has to be aligned with the overall vision.
Creating the Right Culture
One of the biggest challenges that Koinworks has to overcome is establishing a strong team culture and growing its human capital. Once a company scales to a larger number of employees, there is an increasing need to ensure that everyone is aligned in terms of values, mission and focus. Koinworks does this by establishing a culture of learning and experimentation, as well as attracting strong talents that believe in the same vision. Koinworks’ focus as they scale is to form this robust company culture to create a sense of direction and vision, allowing them to continue to empower Indonesians with access to financial capital.